MASTER 
NEGATIVE 

NO.  95-8241 7 


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Author: 


Chamber  of  Commerce  of 
the  United  States  of... 

Title: 

The  reduction  of 
merchandising  expense 


Place: 


Washington, 


C. 


Date: 


[1921] 


%-ei^n-l 


MASTER   NEGATIVE  « 


COLUMBIA  UNIVERSITY  LIBRARIES 
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Chanber  of  conneroe  of  the  United  States  of  Amer-* 
ica«  Domestic  distribution  department. 
The  reduction  of  merchandising  expense •  Me- 
thods which  distributors  throughout  the  United 
States  are  applying  to  ease  the  process  of  re- 
adjustment and  the  results  of  the  methods, 
April,  1921.  Washington,  Domestic  distribution 
department.  Chamber  of  commerce  of  the  United 
States  [1921^ 
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THE  REDUCTION  OF 

MERCHANDISING 

EXPENSE 


Methods  whichi^Distributors  Throughout 

the  United  States  are  Applying  to  Ease 

the   Process  of  Readjustment  and   the 

Results  of  these  Methods 


April,  1921 


11 


i 


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DOMESTIC  DISTRIBUTION  DEPARTMENT 
CHAMBER  OF  COMMERCE  OP  THE  UMTED  STATES 

WASHINGTON 


< 


FOREWORD 

A  copy  of  the  Questionnaire  on  the  re- 
duction of  merchandising  expense  was 
sent  to  every  member  of  the  Chamber  of 
Commerce  of  the  United  States. 
The  replies  represent  the  experience  of 
all  classes  of  Business  Men  in  every 
kind  of  business  from  the  largest  cor- 
porations down  through  the  whole  list 
of  Wholesalers  and  Jobbers  to  the  small 
Retailer  of  a  county  town — from  ,the 
Canadian  line  to  the  Gulf  of  Mexico 
and  from  the  Atlantic  to  the  Pacific 

Ocean. 


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Merchandising  Expense 
Reduction 


SUMMARY 

Under  the  date  of  February  14th,  1921,  the  Do- 
mestic Distribution  Department  addressed  a  Ques- 
tionnaire to  the  members  of  the  Chamber,  which  was 
accompanied  by  the  following  letter  : 

"With  the  pressure  from  the  public  for 
lower  prices  and  with  the  widespread  re- 
duction that  has  resulted,  the  merchant,  to 
make  a  living  profit  must  also  reduce  his 
expense  of  doing  business. 

"We  are  anxious  to  know  what  you  arc 
doing  to  reduce  your  cost  so  that  we  may 
be  able  as  quickly  as  possible  to  give  you  the 
actual  methods  and  facts  which  others  have 
found  beneficial. 

"Many  of  our  members  would  prefer  that 
the  identity  of  our  informants  shall  not  be 
made  known.  This  rule  will  be  observed  in 
your  case." 

Of  the  1652  replies,  a  great  number,  instead  of  re- 
lating to  one  organization  only,  are  compilations  pre- 
pared by  the  President  or  Secretary  of  various  groups, 
so  that  the  actual  number  of  firms  represented  in  the 
replies  amounts  to  many  thousands. 

In  considering  the  tabulations  which  follow,  it 
should  be  remembered  that  the  percentages  of  reduc- 
tions and  increases  are  not  based  upon  all  of  the  re- 


\ 


II 


sponses  to  the  Questionnaire,  but  upon  those  who 
answered  that  they  have  accomplished  some  reduc- 
tion; that  their  expense  in  that  particular  item  has 
increased ;  or  that  it  remains  unchanged. 

PERSONNEL 
'*What  are  you  doing  to  reduce  your  Personnel  Cost?" 

As  might  have  been  expected,  matters  relating  to 
"Personnel"  exhibit  the  greatest  changes.  Wages 
show  some  falling  off,  a  net  average  decrease  of 
4.52^% ;  but  the  Savings  in  Commissions  and  Bonuses, 
11.54%,  and  in  the  Number  of  Employes,  12.43%, 
are  very  marked.  The  most  frequently  repeated 
comment  on  this  question  is  to  the  effect  that  short- 
age of  work  has  produced  a  great  improvement  in 
the  attitude  of  employes  toward  their  jobs,  and  the 
feeling  appears  to  be  that  the  results  will  be  of  as 
much  value  to  the  employes  as  to  their  employers. 

Perhaps  the  most  significant  type  of  response  to 
this  question  is  contained  in  the  numerous  answers 
showing  that  employers  are  opposed  to  lowering 
wages  except  as  a- last  resort.  Others,  of  the  same 
general  character,  tell  of  calling  their  employes  to- 
gether, taking  counsel  with  them  and  securing  their 
approval  of  some  plan  to  reduce  expenses.  In  brief, 
there  is  a  better  spirit  of  co-operation  abroad  in  the 
land. 

PUBLICITY 

**What  have  you  done  to  reduce  your  Publicity  Costs 
to  a  normal  basis  ?" 

There  has  been  a  net  average  increase  in  only  one 
item  of  all  questions,  namely  in  "Publicity,"  wherein 
Circularizing  shows  a  net  average  increase  of  5.48%. 


♦ 


\ 


Although  Advertising  Space  shows  a  net  decrease  of 
9.67%,  and  by  use  of  Cheaper  Mediums  2.53%,  there 
is  a  strong  sentiment  displayed  in  many  answers  favor- 
ing increased  expenditures  in  publicity  during  per- 
iods of  slow  sales. 

SERVICE 

"Please  state  separately  the  approximate  percentage 
of  your  reduction  in  Service." 

Comparatively  few  concerns  had  any  Service  to  re- 
port upon  and  the  net  average  decreases  are  only  .98% 
in  Deliveries  and  .27%  in  Rest  Rooms.  That  is, 
roughly,  a  little  less  than  1%  and  a  little  more  than 
one-quarter  of  1%. 

CREDITS 

"Please  state  saving,  if  any,  accomplished  by  restrict- 
ing Credits." 

"Credits"  indicate  very  little  change.  There  have 
been  some  reductions  both  in  the  Volume,  6.13%,  and 
in  the  Saving  by  Shortening  the  Time,  1.23%,  but 
there  are  many  replies  which  argue  that,  like  Adver- 
tising, Credits  should  be  extended  rather  than  re- 
stricted as  a  basis  of  doing  business.  The  general 
tendency  may  be  expressed  as  a  definite  purpose  to 
drop  all  doubtful  accounts  and  to  speed  up  collec- 
tions wherever  possible. 

OTHER  COSTS 

"Please  state,  approximately,  the  percentages  by 
which  other  costs  have  been  reduced." 

"Other  Costs,"  according  to  the  replies,  have  been 
reduced  principally  by  closer  buying  and  quicker 
turnovers.     They  present  an  encouraging  average, 


. 


i! 


7.12%,  which  is  apt  to  increase  measurably  from 
month  to  month.  A  resulting  advantage  from  this 
effort  will  show  itself  in  fresher  and  more  timely 
stocks. 

GENERAL 

**To  which  of  the  above  five  items  of  cost  (one  or 
more  than  one)  do  you  now  give  the  most  at- 
tention?" 

Items  Per  cent 

1.  Personnel    58.4 

2.  Publicity 7.1 

3.  Service 3.0 

4.  Credits 10.0 

5.  Other  Costs 21.5 

Total   100.00 

In  summarizing  the  whole  matter,  the  answers  to 
this  general  question  furnish  valuable  testimony 
to  the  importance  which  is  attached  to  Personnel  as 
the  item  of  expense  most  in  need  of  attention. 

ADDITIONAL  FACTS 

Of  equal  value  with  the  tabulated  percentages  are 
the  explanations  of  methods  applied  to  the  lowering 
of  costs  which  follow  under  the  general  heading, 
"Additional  Facts,"  classified  under  the  sub-heading 
to  which  they  refer.  It  is  impracticable  and  unneces- 
sary to  repeat  all  of  these  explanations  since  many 
hundreds  of  them  have  a  very  limited  application 
and,  naturally,  repetitions  are  frequent.  Therefore 
only  those  which  have  a  wide  significance  or  present 
some  important  difference  from  the  others  are  re- 
corded. 


« 


There  are  many  contradictions  among  these  meth- 
ods of  decreasing  expense,  particularly  in  Publicity, 
Service  and  Credits,  but  in  a  lesser  degree  the  other 
questions  also.  This  is  to  be  expected.  In  Publicity, 
many  concerns,  after  a  careful  study  of  their  markets, 
believe  that  the  need  for  immediate  sales  supplants 
temporarily  the  deferred  benefits  of  national  or  "good 
will"  advertising;  therefore  their  accounts  are  con- 
centrated upon  local  mediums  and  circularizing.  In 
Service  and  Credits  the  character  and  customs  of  the 
trade  determine  what  can  be  done. 

CLASSIFICATION 

Since  every  manufacturer  is  a  merchant  with  more 
or  less  selling  expense  in  disposing  of  his  product  it 
was  necessary  to  include  this  class  of  distributors. 
But  to  reach  the  percentages  named  herein  no  an- 
swers  were  used  relating  to  other  than  distribution  ex- 
penses whether  from  manufacturers,  lawyers,  bankers 
or  insurance  firms. 

In  presenting  the  Questionnaire  it  was  necessary 
to  assure  the  members  that  their  answers  would  be 
held  as  confidential.  This  resulted  in  receiving  a 
large  number  which  could  not  be  classified  definitely 
as  between  manufacturers,  wholesalers  and  retailers. 

The  main  fact  to  be  gathered  from  these  various 
methods  is  the  careful  study  which  is  being  conducted 
by  business  men  of  every  class;  and  among  these 
methods  some  will  be  found  which  apply  to  every 
kind  of  business. 


A 


8 


V 


Tabulation  of  Percentages 


Method  of  Reduction 

Reducing  Cost 

Increasing  Cost 

Net 

Proportion 
reporting 

Average 
decrease 

Proportion 
reporting 

Average 
decrease 

"  Unchanged 

1  average 
decrease 

Personnel 

Per  Cent 

Per  Cent 

Per  Cent 

Per  Cent 

Per  Cent 

Per  Cent 

By  reducing  wages 

27.29 

16.65 

.98 

2.00 

71.73 

4.52 

By   reducing    bonuses 
or  commissions    

20.04 

57.59 

•  •  • 

•  •  •  • 

79.95 

11.54 

By    reducing    number 
of  employees   

5S.45 

21.35 

.98 

5.00 

40.57 

12.43 

By      reducing     hours 
(part  time  work)    .. 

11.60 

22.72 

•  •  • 

•  •  •  • 

88.40 

2.63 

By    increasing    work- 
ing hours    

7.00 

11.06 

•  •  • 

•  •  •  • 

93.00 

.77 

Publicity 

• 

In  advertising  space  . . 

28.10 

50.48 

9.90 

45.56 

62.00 

9.67 

In  cheaper  mediums.. 

4.38 

64.18 

.98 

29.00 

94.64 

2.33 

In   circularizing    

7.21 

45.30 

11.53 

75.88 

81.26 

•5.48 

In  other  publicity    ... 

4.83 

42.93 

3.35 

33.37 

91.82 

.96 

Service 

In  deliveries    

6.39 

29.06 

2.02 

43.33 

91.59 

.98 

In  rest  room    

.89 

75.00 

.53 

75.00 

98.58 

.27 

Credit 

In    volume    of    credit 
business    

20.81 

29.91 

1.80 

5.00 

77.39 

6.13 

By     shortening     time 
on  charge  accounts . . 

14.94 

^2.64 

4.62 

46.66 

80.44 

1.23 

Other  Costs   

*  Incrf^asA 

38.C6 

18.61 

.30 

25.00 

61.04 

7.12 

—  A 


Additional  Facts 

PERSONNEL 

"We  are  now  compiling  statistics  on  selling  expenses  which  wc 
will  use  in  'weeding  out'  inefficient  salespeople." 

"We  adopted  the  plan  of  morning  meetings  of  fifteen  minutes 
and  have  men  qualified  on  subjects  discussed  to  talk.  The  results 
have  been  marvelous." 

"Installation  of  devices  for  comfort  of  employes." 
"Considerable  further  reduction  in  cost  can  be  effected  if  the 
merchants  will  adopt  the  cooperating  plan  which,  so  far,  is  hardly 
in  evidence  in  this  section,  as  cost  of  living  is  practically  identical 
with  eight  months  ago." 

"We  believe  in  giving  our  help  more  than  a  living  wage  and 
bonus  in  proportion  to  our  earnings." 

"It  is  a  mistake  to  begin  to  cut  the  cost  of  doing  business  by 
cutting  wages.  A  well  paid  working  class  with  reasonable  working 
hours,  with  opportunities  for  the  right  living,  comfort  and  recrea- 
tion, will  produce  right  thinking." 

"Our  belief  is  that  it  is  perfectly  logical  to  reduce  wages  a  little 
less  than  the  dollar  increases  in  purchasing  power,  until  a  normal 
basis  is  reached.  We  do  not  believe  it  fair  to  use  the  present  condi- 
tions as  an  excuse  to  arbitrarily  reduce  labor." 

"We  h«ve  arranged  a  part  time  schedule  by  which  our  men  in 
the  operating  department  are  off  each  fifth  day,  or  twenty  per 
cent  of  time.  To  any  who  prefer  we  are  allowing  a  ten  per  cent 
reduction  in  pay  with  full  time  work.  About  sixteen  per  cent 
of  our  force  have  preferred  the  ten  per  cent  reduction." 

"The  salary  of  the  president,  secretary-treasurer,  as  well  as 
all  the  directors  has  been  materially  reduced,  while  we  have 
not  reduced  tik  wages  of  any  of  the  employes.  Improved  methods 
and  systems  that  could  not  be  installed  during  the  'rush'  in  the 
past  two  years  are  now  being  tried  out  with  excellent  results  for 
economizing  costs." 

"Encouraging  thnft  and  desire  to  remain  with  our  firm  by  the 
employe  voluntarily  saving  and  depositing  in  a  designated  sav- 
ings bank  an  amount  each  month  equal  to  10%  of  their  monthly 
salary,  in  which  event  we  as  a  firm  deposit  a  like  amount  (both 
deposits  are  held  by  bank  in  a  joint  account,  drawing  interest  at 


\f~    "  »t^ 


10 

4%  per  annum.)  If  employe  remains  with  us  for  three  years,  the 
Ml  amount  of  savings  then  belongs  to  employe.  If  employe  leaves 
our  employ  for  any  reason  voluntarily  or  by  request,  then  the  total 
savings  and  interest  is  divided  equally  between  employe  and  firm. 

"Making  them  more  familiar  with  the  goods  they  sell.  Havmg 
factory  representatives  demonstrate  to  the  sales  force  best  features 

and  talking  points." 

"The  writer  (supt.  since  Jan.  1)  spent  almost  his  entire  time 
in  personal  and  group  interviews  which  have  been  absolutely  pro- 
ductive. Out  of  400  people  we  have  found  it  necessary  to  adjust 
only  one  salary  downward." 

"By  having  salesladies  suggest  items,  save  on  bags,  paper,  twine, 
etc.  Showing  stock  clerks  easiest  way  of  doing  work  in  efficient 
manner,  saving  light,  fuel,  etc." 

"We  have  a  school  of  instruction  in  salesmanship  and  as  an 
inducement  offer  extra  commission  on  special  sales  over  the  quota." 

"Reducing  salaries  in  such  departments  as  were  out  of  line, 
stenographers  principally.  Salesmen's  salaries  reduced  on  average 
of  $50.00  monthly,  and  bonus  or  commission  offered  that  would 
replace  this  amount,  if  sales  on  certain  higher  profit  bearing  com- 
modities reached  stated  amount.  Object,  increased  sale  on  better 
profit  bearing  merchandise." 

"In  paying  our  employes  we  pay  a  bonus  for  sales  above  a  fixed 
amount.  We  put  it  squarely  up  to  our  salesmen  that  they  must 
sell  at  least  one-fourth  more  goods  than  formerly  in  order  to  have 
the  same  value  in  dollars  and  receive  the  bonus." 

"Put  forth  every  effort  to  please  and  never  miss  a  sale.  Always 
suggest  something  besides  what  the  customer  buys.  Each  clerk 
must  call  three  customers  and  try  to  ^ell  them  something,  such 
as  washing  machine,  incubator,  cream  separator,  etc." 

"By  giving  a  money  prize  to  each  employee  in  the  department 
that  makes  the  largest  increase  in  sales  each  month  over  the  average 

of  the  past  five  years." 

"We  not  only  manage  business  but  lay  off  our  coat  and  take  a 

hand  ourselves." 

"By  practicing  the  golden  rule  in  all  our  dealings  with  the  em- 
ployes." 

"We  have  offered  a  2j4%  bonus  on  all  increased  business  over 

last  year." 


11 


c 


"Our  principal  method  of  increasing  the  efficiency  of  our  em- 
ployes is  to  take  them  into  the  firm  as  members  as  soon  as  they 
have  demonstrated  their  right  to  such  confidence  as  must  neces- 
sarily be  placed  in  them.    This  has  never  failed  to  get  results." 

"Now  employing  engineers  of  N.  Y.  to  suggest  efficiency 
methods." 

"Think  we  should  use  great  care  not  to  reduce  wages  and  salaries 
as  fast  as  commodities  decline.  We  did  not  raise  them  as  fast  as 
prices  advanced." 

"We  now  have  back  all  our  former  help,  experienced  and  reliable 
and  increased  their  pay  10%  over  1920  salary.  This  affects  five 
men  only.  The  above  increase  conditioned  on  a  more  vigilant  and 
careful  interest  in  everything  we  do — for  economy,  efficiency  and 
profit." 

"By  weekly  letters  in  pay  envelope  encouraging  them  to  feel 
they  must  do  more." 

"We  have  recently  supplied  our  sales  force  with  a  Sales  Build- 
ing Bulletin  Service  and  the  entire  personnel  with  group  life  in- 


surance. 


)> 


"Endeavor  to  have  employes  feel  that  they  are  working  with  us 
rather  than  for  us." 

"Some  employes  taking  night  course  in  accounting  and  sales- 
manship." 

"Have  introduced  new  bookkeeping  system  that  increases  effi- 
ciency without  increasing  cost." 

"By  giving  each  dealer  and  salesman  a  mark  to  shoot  at  and 
rewarding  the  successful." 


PUBLICITY 

"With  business  hard  to  get  we  believe  this  is  the  time  to  ad- 
vertise." 

"We  have  rather  added  to  advertising  as  this  has  always  been 
our  custom — advertise  heavily  when  business  is  hard  and  *go  easy' 
when  it  is  coming  anyway." 

"Are  trying  to  make  what  advertising  we  do  more  effective. 
Have  simplified  the  new  catalog  we  are  getting  out  by  eliminating 
all  goods  for  which  there  is  not  an  active  demand." 

"We  are  striving  for  greater  effectiveness  in  publicity  by  more 


\ 


12 


csreful  selection  of  items  advertised,  requiring  more  careful  mer- 
chandising preparation." 

"There  has  been  a  material  reduction  in  'Dealers  Helps*  which 
are  furnished  to  our  customers  in  proportion  to  amount  of  orders 
placed." 

"Analysis  of  results  obtained  to  make  every  inch  of  space  pro- 
ductive." 

"Am  using  liberal  space  in  my  competitors'  magazines  and  circu- 
larizing fifty  per  cent  more  than  last  year.  When  the  other  fel- 
low quits  I  like  to  begin." 

"Letters  have  been  directed  to  the  various  publications  stating 
that  all  prices  are  in  process  of  liquidation  from  fuel  to  finished 
product,  and  that  consequently  some  reduction  will  be  expected  in 
the  near  future  for  advertising  space." 

"About  the  middle  of  January,  after  taking  inventory  and  hav- 
ing heard  from  enough  of  the  manufacturers  to  know  about  where 
they  stood  as  an  average,  we  decided  that  it  was  up  to  us  to 
move  as  much  of  our  stock  as  possible,  at  a  profit  if  possible,  but 
figuring  on  a  basis  of  replacement  cost.  With  the  public  little 
inclined  to  buy,  lower  prices  plus  an  extra  effort  would  be  necessary, 
and  we  believe  this  will  hold  good  for  some  time  to  come  and  that 
the  days  of  'long  profits'  are  past.  Accordingly  we  put  on  an 
extra  man  to  work  almost  altogether  on  direct  advertising,  a  field 
hitherto  almost  totally  neglected.  This  man  uses  letters,  per- 
sonal calls  and  the  telephone.  Our  newspaper  advertising  in 
February  was  also  increased.  The  total  sales  for  February  show 
an  increase  (in  dollars  and  cents)  of  a  little  over  5%  over  1920; 
the  increase  in  expense  is  about  the  same.  The  gross  profit,  of 
course,  shows  a  decrease  of  16%,  in  fact,  we  just  barely  covered 
cost  of  operating  in  February,  but  we  are  moving  the  high  priced 
goods  and  that  was.  our  real  object.  In  view  of  price  lists  that 
are  now  beginning  to  reach  us,  we  believe  we  have  done  wisely." 

"Owing  to  the  recent  high  costs  of  newspaper  and  magazine 
space  per  thousand  of  circulation,  we  have  found  it  not  very  profit- 
able and  are  spending  our  money  more  and  more  on  the  distribu- 
tion  of  samples." 

"We  have  taken  no  steps  to  reduce  our  advertising  space,  as  it 
is  our  feeling  that  it  is  false  economy  to  cut  down  advertising  at  a 
time  when  business  is  in  need  of  a  stimulant  to  keep  it  alive." 


«) 


1^ 


13 


"Endeavored  to  cut  down  our  commissions  and  agents  by  gene- 
rous advertising  by  circularizing,  thereby  developing  the  direct 
mail  order  business." 

"We  are  economizing  in  space  and  size  of  issues  but  not  prun- 
ing as  to  number  of  or  kind  of  channels.  Our  newspaper  adver- 
tisement rates  have  very  materially  increased,  however." 

"There  is  no  reduction  in  'cheaper  mediimis'  because,  as  wc 
understand  it,  such  are  not  used.  Our  plans  call  for  a  9%  increase 
in  mail  order  circularization.  Interior  displays  and  decorations 
have  been  cut  down  to  a  minimum.  The  outstanding  feature  of 
our  reduction  of  publicity  costs  is  that  of  cutting  down  space  used 
in  newspapers,  which  we  believe  ought  to  be  carried  out  to  a  larger 
degree  by  stores  all  over  the  U.  S." 

"We  are  dropping  a  few  newspapers  whose  rates  have  been 
raised  to  a  level  that  makes  the  further  use  of  such  papers  im- 
possible in  our  case." 

"Have  practically  discontinued  envelope  stuffers  and  pamphlets." 
"We  are  discontinuing  a  house  organ  and  all  newspaper  adver- 
tising and  are  increasing  our  efforts  in  circularizing  the  trade." 

"Are  making  special  efforts  in  special  direct  advertising,  by  per- 
sonal sales  letters,  and  enclosures." 

"We  did  not  circularize  before,  but  now  issue  a  monthly  house 
organ  with  good  results." 

"Reduction  by  purchasing  duplicating  machine  with  which  all 
advertising  is  done." 

"We  regard  our  advertising  rather  as  an  investment  and  as 
business  insurance  than  as  expense.  Our  effort,  therefore,  has  been 
to  maintain  an  adequate  all-around  campaign  at  a  minimum  total 
cost. 


it 


"Use  more  mediums  but  small  space  with  equal  resuults.  Space 
does  not  count ;  pounding  away  all  the  time  is  what  tells." 

"We  do  not  feel  that  we  should  decrease  publicity ;  if  any  change, 
it  should  be  increased." 

"Concentrating  more  than  ever  on  the  consumer,  by  circular 
letters,  house-to-house  work  and  dealer  demonstration." 

"We  have  found  circularizing  to  be  the  most  effective  means  of 
advertising  and  have  increased  rather  than  decreased  our  appropria- 
tion for  this  work." 


\\ 


14 


"Have  increased  our  advertising  expenditures  to  increase  our 
business." 

"We  have  increased  our  direct  circularizing." 

"No  reduction  in  amount  expended,  but  dropping  out  of  territory 
in  poorer  section  and  increasing  efforts  where  results  may  be  ex- 
pected." 

"It  is  our  idea  that  cutting  the  advertising  would  only  increase 
the  cost  of  selling  merchandise  and  we  believe  we  are  right." 

"We  have  concentrated  on  advertising  and  eliminated  general 
publicity." 

"Cut  down  size  of  our  general  catalog  about  18%." 

"We  are  decreasing  the  amount  spent  in  magazines  of  national 

circulation  and  increasing  appropriation  for  direct  advertising,  using 

actual  typewritten  letters." 

"Increased  publicity  by  hangers,  posters  and  calh'ng  attention  to 

the  dechne  in  prices  from  the  peak  with  quality  equal  or  superior 

to  that  at  the  higher  price." 

"Have  stopped  entirely  the  advertising  in  so-called  'charity 
publications.'  " 

"We  have  reduced  the  newspaper  space,  letters,  etc.,  and  in  the 
place  of  this  we  have  given  more  attention  to  extra  values  in  our 
windows,  and  in  our  localities  it  shows  good  results,  because  we 
feel  that  price  is  the  thing  that  is  most  interesting  to  the  trade 
instead  of  reading  matter." 

"We  are  not  trying  to  curtail  our  publicity  but  are  increasing  it, 
c'iS  we  need  it  much  more  now  than  we  have  for  the  past  three  or 
four  years." 

"We  have  recently  started  a  weekly  circular  letter  to  our  out- 
of-town  trade  which  will  substantially  offset  the  service  of  one 
of  our  traveling  salesmen,  who  left  us  February  1st." 

"We  kept  our  appropriation  down  to  bed  rock  during  the  days 
when  there  was  practically  no  sales  resistance,  conserving  our  funds 
for  a  time  when  they  would  stand  us  in  good  stead.  We  feel  we 
now  owe  it  to  our  distributors  and  dealers  and  to  ourselves  to  help 
keep  things  moving  as  satisfactorily  as  possible  by  securing  the 
healthy  flow  of  distribution,  produced  through  consistent,  well 
directed  and  forceful  publicity." 

"Elimination  of  advertising  automobile." 

"We  are  running  the  biggest  advertising  campaign  in  our  history 


15 

in  order  to  cooperate  with  our  connections  in  bringing  back  normal 
business  conditions." 

"Changing  from  magazines  to  newspapers." 

"We  feel  there  is  greater  sales  resistance,  particularly  on  our 
products,  at  this  time  than  before,  and  in  consequence  we  are  tak- 
ing aggressive  action  in  the  matter  of  space  and  direct-by-mail 

eftorts."  ^^ 

"Using  cheaper  paper  stock  for  circulars  wherever  possible. 

"We  reduced  our  advertising  appropriation  by  50%  but  the 
signer  is  not  sure  that  it  was  a  wise  move." 

"Have  increased  our  advertising  300  or  400%.  General  pub- 
licity and  circularizing  have  been  increased." 

"Less  white  space  in  advertising." 

"We  have  begun  the  use  of  an  industrial  film  and  will  make 
this  one  of  our  major  publicity  agents." 

SERVICE 

"By  combining  day  and  night  delivery  so  as  to  do  most  of  delivery 
work  before  10  a.  m.  to  avoid  congested  traffic— thus  reducing 
delays,  accidents,  etc." 

"Discontinuing  helpers  on  motor  trucks." 

"4%  reduction  by  using  one  truck  instead  of  two  on  the  road, 
5%  by  putting  one  man  where  two  traveled." 

"We  have  reduced  deliveries  expense  by  loading  trucks  to  full 
capacity  and  not  sending  them  out  except  with  full  loads." 

"We  have  not  attempted  to  reduce  our  service  in  deliveries  as 
we  believe  that  service  today  more  than  ever  before  is  going  to  be 
one  of  the  strong  factors  in  business  reconstruction." 

"In  the  matter  of  deliveries,  however,  we  do  not  urge  the  use 
of  this  service  by  the  customer,  but  rather  adopt  a  neutral  attitude, 
delivering  with  pleasure  any  merchandise  which  the  customer 
wishes.  Our  sales  people  merely  hand  the  package  to  the  customer 
with  the  statement,  "Thank  you."  They  do  not  as  was  once  the 
practice  when  handling  the  package,  say,  'Do  you  wish  this  de- 
livered?'" 

"We  have  just  recently  completed  a  survey  of  the  delivery 

system." 

"Since  the  war  have  had  one  delivery  per  day,  when  before  we 

had  two.    This  saves  in  many  men  and  trucks." 


Ii 


I 


16 

"It  costs  us  today  20c  each  to  deliver  packages,  while  before  the 
war  it  cost  us  Sj^c  each." 

"We  are  enlarging  our  area  of  delivery  with  motor  truck  ser- 
vice." 

"We  have  reduced  our  truck  expense  25%  and  cut  down  the 
expense  of  our  transportation  costs  by  making  deliveries  at  certain 
times  only,  whereas  last  year  we  were  forced  by  circumstances  to 
deliver  without  any  regard  to  route  or  time." 

"Consider  our  service  department  adjunct  of  sales  and  are  in- 
creasing it  We  are  looking  after  our  trucks  to  greater  degree  than 
ever  before." 

"We  are  endeavoring  to  maintain  our  service  at  higher  than  its 
usual  standard.  We  are  anxious  to  secure  orders  and  these  orders 
in  our  business  result  more  directly  from  good  service  than  any 
other  single  reason." 

"Increasing  list  prices  in  delivered  territory  over  non-delivery 
territory." 

"Have  put  on  our  own  trucks,  instead  of  employing  trucks  or 
drayage  companies,  eliminating  their  profit." 

"We  have  made  no  reduction  in  service.  I  cannot  see  that  our 
public  IS  any  less  entitled  to  good  service  during  a  period  of  slack 
business  than  during  a  period  of  good  business.  As  a  matter  of 
fact  the  present  opportunity  should  afford  right  thinking  concerns 
an  opportunity  to  re-establish  the  service  that  suffered  so  much 
through  the  inefficiency  and  lack  of  interest  of  employees  during 
the  war."  ^ 

CREDITS 

"We  are  more  lenient  on  credits  based  on  moral  standards  than 
on  nnancial. 

"More  liberal  on  small  credits  and  small  accounts  than  ever.  To 
increase  our  sales  and  build  up  GOOD  WILL." 

"Close  attention  and  sharper  action  taken  with  credit  business. 
Cash  business  being  promoted  by  quoting  liberal  discounts  and 
boosting  'cash  and  carry'  method  through  circulars  and  salesmen." 
Use  trade  acceptances." 

"We  have  not  changed  our  limits  or  time  of  credits,  but  don't 
call  on  those  customers  who  have  been  slow,  working  on  those  who 
are  prompt. 


\ ) 


\ 


r 


17 


"We  have  within  one  year  reduced  our  regular  credit  terms 
from  net  sixty  days  to  net  thirty  days.  This  has  resulted  very 
satisfactorily.  It  means  just  about  a  50%  saving  in  our  average 
current  accounts,  outstanding." 

"We  are  wherever  possible  selling  on  30  days  Federal  trade 

acceptances." 

"By  selling  for  cash  only  it  is  possible  to  save  on  bookkeeping, 
collections  and  worthless  accounts." 

"We  are  charging  interest  on  all  accounts  which  run  longer 
than  the  fifteenth  of  the  month  following  date  of  purchase.  This 
has  reduced  the  monthly  balances  on  our  accounts  approximately 

25%." 

"No  change  in  terms  of  payment  of  domestic  accounts,  but  mak- 
ing more  liberal  terms  of  payment  on  export  business  to  meet 
competition." 

"All  sales  made  that  settlement  is  to  be  made  immediately  by 
trade  acceptance  or  cash." 

"We  are  watching  our  collections  carefully  but  have  put  in  no 
program  of  restricted  credits.  As  a  matter  of  fact  we  have  ex- 
tended help  to  a  good  many  of  our  customers  who  need  it  worse 
than  we  need  the  money." 

"No  credit  to  those  who  steal  time  or  who  refuse  proper  state- 
ments or  refuse  to  give  notes  or  acceptances." 

"Over  two  years  ago  we  shortened  our  credit  terms  from  60 
to  30  days  and  are  very  glad  we  did  so." 

OTHER  COSTS 

"Another  place,  of  course,  where  reduction  can  be  created  is 
greater  turnover,  to  employ  less  capital  tied  up  in  merchandise, 
thereby  saving  from  several  angles  expense  in  the  way  of  interest, 
insurance  and  taxes." 

"Have  carefully  curtailed  traveling  expenses  of  men  on  the 
road  by  letting  them  work  territories  more  closely,  thereby  avoid- 
ing expenses  of  long  trips.  Are  carefully  avoiding  expense  of  long 
distance  telephone  and  telegraphing  by  employing  mail  in  all  cases 
where  possible." 

"We  are  now  doing  all  of  our  housekeeping  work  in  the  day- 
time and  are  accomplishing  this  with  a  smaller  force  of  men  to 
the  extent  of  80i%  saving  in  the  number  of  cleaners  and  porters 


18 


19 


employed  than  when  we  were  operating  both  day  and  night." 

"We  are  watching  every  detail  of  our  business  and  especially 
those  departments  showing  loss  in  volume  of  sales,  also  depart- 
ments not  making  profit ;  and  purchasing  minimum  supplies,  etc." 
"Cutting  down  all  improvements  until  we  can  pay  for  them  with 
PROFITS." 

"Reduction  of  stocks,  thus  saving  interest,  taxes  and  insurance 
charges." 

"More  care  is  exercised  now  than  for  the  past  three  or  four 
years  in  every  item  such  as  saving  packing  cases,  paper,  twines,  etc." 

"Close  analysis  of  expenditures,  and  percentage  should  not  be 
allowed  to  exceed  the  same  percentages  of  sales  in  past  years." 

"Every  one  of  them.  We  watch  them  like  a  'hawk  watches  for 
a  chicken.'  " 

"We  worked  out  a  budget  for  expenses  for  each  department  and 
then  took  each  item  in  detail,  notified  the  manager  of  that  de- 
partment that  he  must  come  within  his  budget." 

"Can  maintain  present  salaries  at  least  during  the  year  of  1921." 

"The  matter  of  figuring  out  ahead  what  funds  we  will  have 
available  and  planning  our  expenses  accordingly." 

"Interest  charges  lessened  by  reducing  stock  of  merchandise  and 
reducing  investment  accordingly.    Also  less  insurance  and  taxes." 

"We  are  making  forecast  lists  of  monthly  expense  items  such  as 
salaries,  general,  incidentals." 

"We  are  closing  up  various  branch  offices  that  were  not  operat- 
ing at  a  profit." 

"We  are  increasing  our  business  by  taking  smaller  profits  and 
thereby  receiving  greatly  increased  volume." 

"We  have  adopted  the  method  of  thinking  TWICE  before  mak- 
ing an  expenditure,  and  have  figured  out  what  each  store  can  spend 
each  month  and  no  more." 

"Improved  systems  of  handling  merchandise  and  office  routine 
and  a  more  economical  distribution  of  space  play  into  our  plan  of 
reducing.    Cannot  estimate  percentage." 

"Cutting  out  entertainment,  traveling  and  other  incidental 
expenses,  scrutinizing  telegrams,  long  distance  messages,  postages 
and  creating  short  cut  methods  where  possible." 

"Cut  in  employe  magazine  from  fortnightly  to  monthly." 

"Eliminating  some  of  the  extravagant  habits  contracted  during 
the  period  of  hysteria." 


i 


•  t^fn 


"Increasing  volume  of  sales  and  decreasing  stock  have  in- 
creased turnover  4  to  8  times  a  year.  Interest  now  a  credit  in- 
stead of  a  debit." 

"This  firm  is  putting  in  a  complete  cost  accounting  system 
and  finding  it  a  great  factor  in  reducing  costs." 

"We  have  reduced  the  market  price  of  our  goods.  Noting  the 
disastrous  effects  caused  to  retailers  with  full  shelves  by  the  re- 
ducing of  price  on  the  part  of  the  manufacturers,  we  are  pro- 
tecting our  retailers  by  maintaining  our  prices  at  source  of  supply 
until  they  can  reduce  their  stocks  without  loss." 

"Our  costs  are  being  reduced  by  forced  liquidation  of  merchan- 
dise based  on  replacement  values." 

"Have  reduced  amounts  borrowed  and  cut  interest  cost  consider- 
ably." 

"We  are  jobbers  and  have  made  many  reductions  regardless  of 
the  replacement  value,  and  reductions  in  price  have  been  for  the 
purpose  of  reducing  our  stock,  as  we  anticipate  a  further  decline 
and  we  are  doing  everything  in  our  power  to  dispose  of  such  items 
on  which  we  have  an  abnormal  stock." 

"Better  merchandising  and  more  turnovers  will  in  our  opinion 
enable  us  to  stand  legitimate  expense." 

"Am  doing  as  much  business  as  last  season  by  running  special 
sales  on  any  long  item,  in  stock." 

"We  have  instituted  a  better  stock  keeping  system  which  will 
give  us  a  better  turnover.  We  hope  thereby  to  reduce  our  ware- 
housing cost;  we  also  hope  to  reduce  our  interest,  insurance  and 
taxes  charges  by  a  reduced  stock  of  merchandise." 

"Expenses  being  reduced  by:  Unification  of  files  and  mail; 
unified  reading  of  mail,  eliminating  duplications;  elimination  of 
individual  stenographers  and  establishment  of  unit;  use  of  inter- 
office memo,  eliminating  typed  memo;  close  supervision  over  office 
supplies,  stationery,  laundry,  electric  lights,  etc.;  insisting  upon 
punctuality;  survey  made  of  all  office  equipment  to  eliminate 
purchases." 

"We  are  promoting  sales  through  our  local  organization  by 
buying  home-made  goods  sufficient  to  keep  our  home  people  em- 
ployed." 

"10^  is  saved  by  eliminating  errors  and  duplicate  work,  better 


^ai 


I' 


I 


«<1 


"1 


20 


service  and  care  in  handling  stock,  accounts,  sales,  wear  and  tear 
on  equipment,  trucks,  wagons,  etc." 

"Overhead  cut  by  reduction  of  administration  such  as  items 
covering  borrowed  money,  insurance,  legal  expense." 

"Have  material  arrive  so  there  will  be  no  demurrage;  no  over- 
time in  unloading." 

"We  have  reduced  our  merchandise  stock  and  are  saving  storage 
25^.  Also  reduced  our  loans  to  almost  NIL  and  have  cut  down 
our  interest  expenses  80%." 

'Reduction  in  overhead  by  change  in  accounting  system." 
'Biggest  immediate  saving  possible  in  reduced  interest  account 
resulting  from  decreased  inventory." 

"We  have  an  item  of  general  expense  including  telegrams, 
cables,  stationery,  telephone,  entertainments,  periodicals,  etc.,  of 
about  $350,000.00.  This  has  been  reduced  to  $227,000.00  an- 
nually and  will  go  under  $100,000.00  this  year." 

As  a  conclusion,  there  is  appended  through  the  courtesy  of  the 
National  Wholesale  Grocers'  Association  a  description  of  the 
methods  adopted  by  a  Middle  Western  wholesale  grocer.  These 
are  just  as  applicable  to  any  other  business,  and  to  a  retail  as  well 
as  to  a  wholesale  house. 

1.— THIS  FIRM  WILL  SAVE  ABOUT  $16,500 
on  interest  charges.  Average  borrowed  capital  has  been 
reduced  from  $300,000  in  1920  to  $95,000  in  1921. 

How  it  was  done  is  self-explanatory.  "Dead  horses" 
have  been  moved;  outstandings  held  firm;  inventories 
cut  sharply  but  intelligently;  insurance  and  storage 
charges  reduced,  etc. 

2.— THIS  FIRM,  WITHOUT  CUTTING  SAL- 
ARIES or  wages  will  save,  at  least,  $10,500  on  its  1921 
payroll  as  against  1920. 

It  has  been  brought  about  by  reduction  of  persons  em- 
ployed; in  one  warehouse  a  floor  force  of  12  men  are  do- 
ing the  same  work  that  17  men  did  a  year  ago.  (This 
grocer  believes  that,  not  including  salesmen,  10  to  20% 
too  many  people  are  employed  by  the  average  grocer.) 
Where  there  is  a  resignation,  death  or  removal  the  work 
is  either  divided  among  other  employees  or  a  new  em- 


^         I        C 


21 


ployee  starts  at  a  figure  20%  to  30%  under  the  amount 
the  position  paid  previously. 

3.— THIS  FIRM  HAS  REDUCED  ITS  AVERAGE 
inventory  by  $172,000  as   compared  with   last  year- 
slashing  interest,  storage  and  insurance  costs,  etc. 

Which  means  that  this  firm  is  following  the  market 
closely  but  not  ultra-conservatively. 
4.— THIS  FIRM  HAS  MELTED  $100,000  into  cash 
that  was  frozen  in  slow-moving  stocks  that  required 
special  attention.    They  got  it. 

Here  is  found  leadership  at  its  best.  The  head  of  the 
firm  has  adopted  the  policy  of  "walking  the  stock  rooms," 
personally,  each  week  and  sometimes  daily.  He  takes 
an  assistant  with  him  and  stocks  that  look  too  large  or  a 
little  "slow"  are  marked  for  special  attention.  They  are 
moved  by  intensive  salesmanship. 
5.— THIS  FIRM  HAS  HELD  "OUTSTAND- 
INGS" at  around  1920  figures  with  just  a  slight  increase. 

In  this  method,  account  is  taken  of  present  conditions 
and  the  figures  of  1920  were  favorable. 

6.— THIS  FIRM  IS  BRINGING  INTO  ITS 
STOCKS  a  number  of  items  that  have  been  eliminated  in 
the  past  eight  or  ten  years. 

By  going  over  its  old  stock  records  the  firm  added 
profitable  items  that  were  dropped  during  the  past  eight  or 
ten  years. 

7.— THIS  FIRM  HAS  DETERMINED  TO  PARE 
THE  entire  payroll,  probably  excepting  salesmen,  from 
20%  to  30%,  in  the  event  that  the  methods  outlined 
above  do  not  bring  the  desired  results. 

Here  is  the  last  step  in  the  policy  of  this  firm.  The 
hope,  if  not  the  opinion,  at  present,  is  that  it  will  not 
be  necessary. 


Date  Due 


%7:r-5 

'.d 

j'^ 

1 

_ . 

«• 

JAH25 


J922 


COLUMBIA  UNIVERSITY  UBRARIES 


0044243375 


C35 

JhLber  of  comerce  of  the  United 

•       _    


'^6o 


expense .  ^^\ 


(lf«H 


^S"53^ 


NEH 


^H  I  tt99S 


END  OF 

TITLE 


